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Aged Shelf Corporations

Shelf Corporation otherwise known as an Aged Corporation (or “Aged Company”)   is a corporation (or LLC) that is already formed,  but not in use, and ready for “purchase” by a new owner.  There are many reasons  that people purchase shelf corporations, and there are certain things to look  out for when considering one of these “ready made” corporations.

Shelf and Aged Corporation Advantages:
  • Saving time by foregoing the time and expense of forming a brand new corporation
  • Instant access to contract bidding may not be possible in all cases. Most bidding contracts require that your company be in existence for a specified minimum length of time. Be sure to check on a case-by-case basis and use full disclosure as to when you acquired your company.
  • Instant company acquisition.
  • Corporate filing longevity.
  • May be more attractive to potential investors and investment capital. Naturally the proper legal filings need to be made and age of the company, alone, is only considered to be a minor factor.
  • May or may not have faster and easier access to borrowing. Again there are other factors that have more weight such as business credit rating and profitability.
Nonetheless, we recommend honesty and full disclosure as to the date that you acquired the aged company.    Shelf and Aged Corporation Disadvantages and Caveats include:
  • Pre-existing liability potential
  • Pre-existing debt issues
  • Pre-existing business transactions that may lead to future liability

WHY USE A SHELF CORPORATION?

 It is responsible to note that age is not the only factor and will likely not  be a main factor in business and lending relationships, engaging in business,
credit, or real estate agreements. As an established company it can save some  time without having to go through the entire process and waiting time frames of  establishing a brand new corporation.  Most potential business resources are  hesitant to engage brand new or up-start corporations.  By approaching them as  an established corporation or company that has actually been conducting business  (obviously, the more years the corporation has been in existence, the better),  the more likely your company may be taken seriously and this may grant your  business more access to business relationships. To be clear, the credibility  increases, in our opinion, when the company is actually engaged in the business  and not merely by the number of years the company has been sitting on a shelf.  These relationships may include agreements, Dun & Bradstreet-type rating  systems, etc., may also all be considered when looking at potential aged  corporations.  Additionally, it is of paramount importance that these shelf  corporations are acquired from trusted sources that know the intricacies of  weeding out those with potential built-in or existing liability. 

Once you have properly selected your shelf corporation, the company has  immediate filing history. Does it give you instant credibility for your company
and corporate image? We cannot say that that will necessarily happen. But, what  if you choose a company that coincides with the number of years that you have  actually been engaged in the type of business that the corporation will perform?  Naturally, there is no guarantee that you will instantly be able to bid on state  contracts (states generally have minimum longevity rules for companies that are  allowed to bid on their contracts), obtain lines of credit easier and obtain  loans from the Small Business Administration in your state, and attract  potential investors more readily with an “established” corporation. The bottom
line is, be honest and let others know that you recently obtained the company,  if that is the case.

As is mentioned above, it is critically important that the shelf corporation  you are considering not have any inherent or lingering liabilities.  For the
most part, this can be assured by looking into the history of the corporation  and ensuring that the extent of its business activities were limited to the
application of an Employer Identification Number and maybe the formation of a bank account.

 There are some quantifiable exceptions to this rule.  There are times when  very well established corporations get shelved, for a variety of reasons, and
these can be inherently quite valuable due to their tenure or amount of time in  existence.  These can be carefully scrubbed for liabilities and exposure by
qualified entities, and are in high demand, with the demand and their price  increasing depending on how long they have been established.

 Simply put, if you are buying an aged corporation directly from its owners,  there is a fair amount of due diligence involved:  you should be concerned if
the person or group selling the aged corporation has engaged in any transactions  that may produce some type of future liability for the corporation or its
stockholders.  This may not always be easy to examine, and certainly requires some expert investigation.  The best practices approach is to only acquire aged
or shelf corporations from reputable providers (or resellers) who have a history  of successful transactions in this arena.  These providers can be counted upon  to provide indemnification to the purchaser (a guarantee against pre-existing  debts or liabilities) for the sale, and to conduct all of the due diligence
prior to offering the shelf corporation for sale.

GL Capital Trust has access to hundreds of Aged Corporations.  For specific information on available Shelf Corps and pricing call us today at 866.212.0343.

GL Capital Trust are not attorneys and therefore do not provide legal advice.  Information on this site is for informational purposes only based on our areas of knowledge and expertise.  No information on this site should be construed as legal advice or substitute information you should obtain from your attorney, accountant or other professional advisor.
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